Ethics - Bad for business?? 2

[guestgulkan]

There has been in the past decade or so - a greater push for businesses to subscribe to some sort of ethical code of practice.
We have banks that subscribe to the 'Ethical' banking code here in the UK. For example - These banks would not lend to business that might want to build a dam - which might affect wildlife, or the local eco-syatem.

Also we have have supermarkets who only buy from 'Ethically approved' sources.

My question is - Is this all a gimmick pandering to the latest fashion??

How would any of you feel if your CEO turned down a multi-million $$$ IT (hardware or software) contract because he felt it wasn't Ethical to build that dam I mentioned earlier??

 

[xutopia]

From experience I don't think that ethics is detrimental in the long term to a nation/company/organization. On the contrary it is great for their survival.

Just look at the roman empire how they had no ethics towards the end of their era. They died because to them anything that stopped or slowed their expansion had to be ignored/destroyed even if that meant common sense.

Gary

http://www.xutopia.com

Haran
==========================

 

[manarth]

It seems to me that there are 2 things here -

1. Refusing to support unethical practice because you're morally opposed
2. Refusing to support unethical practice because refusal makes good business sense (either by giving positive publicity or by avoiding negative publicity)


The second case is easy - not only is it good business practice, it also happens to be morally sound.

But I do agree - this oftens seems to be a gimmick simply for the sake of some positive publicity. But hey, I'm not complaining - even if they do it for the publicity and not from their moral ground, that's fine (as long as they DO stand by their ethical statement in practice).

The first case is a little tricky - what if the company will go bust unless the CEO accepts the contract? how do the shareholders feel? what previous ethical promises have been made?


Intellectually, I support all "ethical trading" - unfortunately I do find it hard to live up to the idealism, and I do occasionally "sellout" just because selling out is easy. But I do have the grace to feel guilty about it.

<marc> i wonder what will happen if i press this...[ul][li]please give feedback on what works / what doesn't[/li][li]need some help? how to get a better answer: faq581-3339[/li][/ul]

 

[Chopstik]

Define &quot;ethics&quot; in this case.

In the US or UK, it might be ethically incorrect to build a dam for fear of environmental damage. However, in some (developing) Asian nations, not building said dam may cause an ethical issue as this is viewed as a way of fostering development. Whose ethics are correct? Who imposes those ethics?

Does a US or UK based company operate on the ethics of their home nation or the ethics of the nation in which they operate? Especially in the case of the above example?

Everything is absolute. Everything else is relative.

 

[CajunCenturion]

Getting into an interesting area here, and that being the heirarchy of ethics.

My initial thoughts about the bank not lending money to company to build a damn because of the potential ecological considerations would be an unethical decision.

The purpose of the bank is to make money for the stockholders, and in fact, the officers of the bank have a legal and feduciary responsbility to those stockholders. For a bank officer to place his own &quot;ecological ethics&quot; above the feduciary responsibilities of the bank is not only un-ethical but in some case, may actually be illegal, depending on where you are, and the official position of that officer within the bank.

The bank's job is to assess the business implications of the loan and make the best business decision for the bank and its stockholders. To do otherwise, to go against the charter of the bank, would be unethical. It may be that the bank, for public relations purposes may be able to sell that refusing the loan is in the best interest of the bank, and I won't argue with that, but in any event, the bank has to make the best business decision it can.

In answer to you other question guestgulkan, how would you feel if your CEO turned down .... Again, you have an officer of a company, who has an ethical responsibility to the stockholders, and ethical responsibilities to the employees, and of course to self and family. What right does the CEO have to place his/her own personal ethics above those to which he/she has a professional responsibility. In my opinion, the CEO, when acting in the professional capacity, should place the professional responsibilities over his/her own personal morality. Personal ethics should not take precedence over professional ethics in professional situations. And the reverse. Personal ethics should take precedence in personal situation.

Good Luck
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As a circle of light increases so does the circumference of darkness around it. - Albert Einstein

 

[cdogg]

My initial reaction too is that the decision by the bank would be unethical, mainly for the same reasons as CajunCenturion pointed out.

However, as I consider the possibility that negative publicity could also cost the stockholders in the long-run, is it right for us to judge the decision without knowing the outcome? My insight is that it would be unethical if the decision hurts any member vested in the company, but could be ethically acceptable if it has no bearing and creates positive publicity.

Personally, I think it would be great if some businesses could apply pressure on the market as a whole to reform bad practices - just as long as the consumer isn't the one who pays for it.




~cdogg

&quot;The secret to creativity is knowing how to hide your sources.&quot;
- A. Einstein

 

[manarth]

&quot;it would be great if some businesses could apply pressure on the market as a whole to reform bad practices - just as long as the consumer isn't the one who pays for it.&quot;

trouble is, some unethical practices (factory farming?) are cheaper / more cost effective than ethical practice. So the business has to increase prices or chip away at the profits.

There are some case where ethical practices do cost more.

<marc> i wonder what will happen if i press this...[ul][li]please give feedback on what works / what doesn't[/li][li]need some help? how to get a better answer: faq581-3339[/li][/ul]

 

[DonQuichote]

I work in a medical company and yes, if a CEO, a marketing employee or a manager would refuse a project because it's unethical, they'd have my full support.

Where I live, it sort of is a crime to support crime. I say sort of, because it is not a crime in itself if you do it from a business perspective. Deception is punishable, except if you do it to consumers. Cruelty to animals is an official crime, except if you do it to produce more as a farmer.

And there's the problem. For making money, the word &quot;ethics&quot; seems to have another meaning.

 

[petermeachem]

&quot;The purpose of the bank is to make money for the stockholders&quot;

Ordinary banks yes, but not the banks that guestgulkan was referring to. One reason why I have not had a bank account for many years. I find a Building Society account more satisfactory. I take it you don't have ethical banks in the US?

http://www.therockalltimes.co.uk

http://www.robotwisdom.com/

 

[CajunCenturion]

That's interesting. No, I am not familiar with ethical banks. That is a new concept to me.

Now the question becomes, who decides what is ethical or what is not, or perhaps more to the point, who evaluates the various trade offs in determining what avenues to pursue, and those to leave alone.

Let's take the same damn example. The premise from the question was that the bank would not lend to a business that might build a damn because of the ecological impact. A reasonable concern, but why would the business want to build the damn, and what would be the benefits of having the damn. Could it be to generate power? Farming irrigation for growing food? Is saving the wildlife more important than growing food for the hungary?

I'm reminded of ecological concerns voiced here many years ago opposing the building of oil wells in the Gulf of Mexico because it would affect the wildlife. Well it did affect the wildlife. It brought the fish back. The underwater superstructure that supports the drilling rigs have become some reefs, with lots of fish coming to the area.

Each situation needs to be evaluated on its own merit, and there is no doubt that every situation has positive and negative sides with trade-offs. Ethical on one level, un-ethical on another. So whose ethics are driving the decision process?

Good Luck
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As a circle of light increases so does the circumference of darkness around it. - Albert Einstein

 

[cdogg]

&quot;So the business has to increase prices or chip away at the profits.&quot;

...or the execs could take a pay cut, which most are NOT willing to do.

If they are willing to make that decision to deny the business building the dam and take a pay cut to cover any loss in profit, then I see nothing ethically wrong with their decision. I'm sure in some industries where resources are abundant, a single contract rejection is not going to affect profits substantially.

Of course, I'm just generalizing here. There are probably more cases of such ethical practices hurting the overall business, as there are ones that do not.

~cdogg

&quot;The secret to creativity is knowing how to hide your sources.&quot;
- A. Einstein

 

[petermeachem]

http://www.co-operativebank.co.uk/.

They decide what to invest in by asking their customers.
It seems a bit wrong (to say the least) to ask a boss to take a pay cut because he/she refuses a contract because they don't think it is the right thing to do. I don't think that 'profit is all that matters' is a good way to behave.

http://www.therockalltimes.co.uk

http://www.robotwisdom.com/

 

[CajunCenturion]

With respect to the boss taking a pay cut. The boss has the responsibility to insure that the payroll can be met. All of the employee are dependant on the boss to make the payroll to feed their families, pay for their house, etc, etc.

We're not talking about criminal behavior of course, but in situations such as the ecological dilemma, I would have a problem with a boss who, for his/her own personal reasons, decides not to take a contract that he/she feels is right, in turn does not take a pay cut, and then has to lay off employees because the company can no longer afford to keep them. The boss has violated the trust (at least an implied trust), that the boss is taking care of the business. At the very least, the employer should involved the employees in that type of decision, because they have a stake in the matter as well.

I agree that 'profit is all that matters' is a not good way to behave. I also believe that sacrificing your employees for environmental causes is not necessarily a good business either.

Good Luck
--------------
As a circle of light increases so does the circumference of darkness around it. - Albert Einstein

 

[petermeachem]

Which brings us neatly to the Kyoto Agreement doesn't it.

http://www.therockalltimes.co.uk

http://www.robotwisdom.com/

 

[GreenTeeth]

Hi there,

I didn't want to mention any names as such, but as the co-operative bank have already been mentioned, I shall carry on.

The co op claim that they do not directly invest in unethical things. They also make the point in their literature quite clearly that the buck has to stop somewhere, and that they have no control over what that company does. i.e. they refuse to fund anything to do with Arms trading what so ever. Yet if that company dicides to buy shares in the arms trade, that is down to them, and the co-op have no control over that. Plus you will find that all their accounts and finance is all done (or certainly use to be done ) through one of the big four who most certainly do fund arms and many other unethical issues.

But I say have a star for trying. Companies can only be so ethical, as most of the money generated within the world comes from raping the land and it's people essentially (that is my opinion though and I am happy, nay delighted should anyone tell me 'tis otherwise) But look at it, someone funds arms, someone deals the cutting down of the rainforests, we all fund the oil companies, and you try having nothing to do with a well known purveyor of highstreet chocolate, coffee, baby products and I found out the other day most of the pet food you buy (Yes it all comes from one company and possibly one of the most unethical companies that ever there was both in terms of raping the land, to the way it treats the general public).

So to the original question, I don't think that it is necessarily pandering to the latest trends and fashions, though of course you are going to get the band wagon riders, and yes, ethics is quite fashionable at the moment, but then so is alternative health at the moment. But I am of the opinion that as long as there are the odd few putting in the Karmic time then surely there is a bit of hope for the human race. And don't forget the statistic that some people like to pull out about (I can't get the figures right I'm afraid) 10% of the population owning 90% of the money. And if that is the case, surely there are more who beleive in ethics than don't. If of course we are talking about Money Vs Ethics.

I do support ethical companies myself as best I can and will continue to do so as someone does have to put in the time. I would rather be able to sit in the most amazing countryside with friends I love, than in a walled garden with so called friends I could not trust.

 

[CajunCenturion]

I looked over the financial statements and from the 2002 financial statements, its a nice profitable bank. If it's truly a co-operative bank, then the members are the stockholders, and so the bank does cater to it's stockholders, just as any other bank does. And obviously, their decision making has been good, as their profit margins are growing. And that's wonderful. More power to them.

--------

I'm sure that I follow the logic of how we've neatly arrived at the Kyoto Agreement. Perhaps you could elaborate.

Good Luck
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As a circle of light increases so does the circumference of darkness around it. - Albert Einstein

 

[guestgulkan]

To answer Cajun's question:-

I have never known my CEO to turn down a contract on purely ethical grounds (his personal ethics that is).

However, we have turned down a contract where we were unsure of the the end-user motives.

Here is the story (a true story)
It was back in the early 90's and I was working for a company that made 'non contact x-ray gauges'.
(these are used to measure the thickness of steel in rolling plants).
We had just developed a version capable of measuring pipes.
Were approached by a steel mill manufacturer for one of these for a new plant they were building in Iraq.
You will remember that in the early 90's there was this Iraqi supergun affair.
In the end it was decided that we better not take this contract because we could not be totally satisfied that the pipes were really for an oil pipeline as the end user originally stated.
We lost money by not taking that contract which would have greatly help offset our R+D costs.

Ok the reasons were not totally on ethical grounds but we went with the prevailing political climate at the time.

 

[CajunCenturion]

The story is nice, and is certainly not the only one in its genre.

My question was not so much about whether is has or has not happenend, but how would you feel if after your company turned down that contract, you got let go because the company lost money? And did you have any input in the decision not to accept that business?

And again, the ethical dilemma that I am raising is to the CEO who makes a choice (which I do not question his/her right to make) between turning down unethical business and laying off employees as a result vs accepting the business to keep everybody on the payroll.


Good Luck
--------------
As a circle of light increases so does the circumference of darkness around it. - Albert Einstein

 

[petermeachem]

Cajun,

'I also believe that sacrificing your employees for environmental causes is not necessarily a good business either.'

Substituting 'your citizens' for 'your employees' and adding in 'standard of living' after sacrificing (I assume you don't really mean sacrificing!) looks like certain countries stand on Kyoto.

You have to have some sort of standard, you can't just say we did it cos it's good for business. Otherwise manufacturing wmd's, drug-running, slavery, paying farmers in third world counties a pittance would all be ok. There was an article on the TV the other evening about cut flowers sold in UK supermarkets for a lot of money. They are grown in Kenya. The farmers get a very very small amount of cash and use very toxic pesticides into the bargain. This makes money for the supermarkets, but must be seen as bad business overall. I don't think we should take such a narrow view as 'its good for business'. It should be good overall before it is done.

http://www.therockalltimes.co.uk

http://www.robotwisdom.com/

 

[CajunCenturion]

I think we're in agreement petermeachem. As I stated previously, &quot;Each situation needs to be evaluated on its own merit, and there is no doubt that every situation has positive and negative sides with trade-offs. And even in the previous statement, I said the sacrifice is not necessarily good business.


Good Luck
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As a circle of light increases so does the circumference of darkness around it. - Albert Einstein